Japan output up, jobless rate falls

Japan has logged a modest rise in factory output in March as the nation's unemployment rate hit a multi-year low, official data shows.

Tuesday's new figures also come days after the Bank of Japan (BoJ) boosted its inflation and economic growth projections for the world's third-largest economy as it eyes an end to years of deflation.

Analysts said the pickup signalled the big spending and aggressive monetary easing policies under Prime Minister Shinzo Abe, dubbed "Abenomics", were having an impact as consumer and business confidence picks up and Japanese stocks soar on a weaker yen.

"Not only due to warmer temperatures in March, but also as gains in stocks and expectations for an economic recovery buoy spending ... This is an effect of Abenomics."

However Credit Agricole economist Yoshiro Sato cautioned that the "modest" March pickup underlined how a weakening yen – which helps boost exporters' competitiveness – is "not necessarily a silver bullet for production recovery unless real demand recovers both home and abroad".

March factory output rose 0.2 per cent from the previous month, according to figures from the Economy, Trade and Industry Ministry, while the picture was even brighter on a quarterly basis with a 1.9 per cent factory output increase between January and March from the previous three months.

"Industrial production shows signs of picking up at a moderate pace," the ministry said in a statement.

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Also on Tuesday, separate figures from the internal affairs ministry showed Japan's jobless rate stood at 4.1 per cent in March, down 0.2 percentage points from the previous month, and the lowest level since November 2008.

On Friday, the BoJ's semi-annual economic report estimated 2.9 per cent growth in Japan's economy for the fiscal year to March, up from an earlier 2.3 per cent projection made in January.

It also tipped inflation to hit 0.7 per cent, also up from an earlier 0.4 per cent projection, as Tokyo and the central bank ramp up their battle to reverse years of falling prices which have crimped private spending and business investment.

The BoJ held off announcing any new policy measures as it wrapped up its first meeting since unveiling a huge stimulus package earlier this month aimed at stoking the economy and beating years of falling prices.